ECONOMY SECRETARY Arsenio M. Balisacan said the slowdown in luxury spending due to the public works corruption scandal could mean that consumption will be redirected to locally sourced goods and services.
“I like that there’s a slowdown in those areas because these are very import-dependent anyway. The value added is low,” he told reporters on the sidelines of an event on Oct. 16.
Luxury spending at any rate does not generate much economic activity.
“If our consumers are shifting to locally produced goods that are not as luxurious, then it creates more economic activity,” he added.
Foundation for Economic Freedom President Calixto V. Chikiamco said sales of luxury or ultra-high-end condominiums are slowing down, indicating a dampening mood in the entire luxury sector.
“It’s not going to affect the entire economy as the luxury segment is a tiny part of it but it will certainly affect luxury goods purveyors,” he said.
Separately, Mr. Balisacan said the government is reviewing rice tariff policy, adding that he met with Trade Undersecretary Allan B. Gepty to discuss the tariff review after farmers lobbied to restore the rate to 35% from the current 15%.
“We are concerned about high prices of rice (and the impact on) our poor consumers,” he said.
“But we are also concerned about the impact of high prices of rice on inflation, which can impact on macroeconomic fundamentals.”
Agriculture Secretary Francisco P. Tiu Laurel, Jr. has said that the government will extend the rice import suspension until the end of this year but keep tariffs at 15%.
Mr. Balisacan also noted that the 30% fall in global rice prices should be factored into the decision.
Officials are weighing how to balance stabilizing consumer prices, managing inflation, and protecting farmer incomes, Mr. Balisacan said.
“Our farmers bore the burden of that, their farmgate prices have also come down so much and that’s what we need to address, how we can provide and ensure that our farmers remain profitable in their enterprises,” he said.
However, Mr. Balisacan said the tariffs alone are not enough to help farmers and may “need other tools.”
“For example, directly subsidizing the price received by our farmers would be one such policy goal or instrument to ensure that the benefits of world prices and the tariff reduction are shared by everyone,” he said. — Aubrey Rose A. Inosante